Robust Optimization Approach to Process Flexibility Designs with Contribution Margin Differentials

Problem definition: The theoretical investigation of the effectiveness limited flexibility has mainly focused on a performance metric that is based maximum sales in units. However, this could lead to substantial profit losses when used guide designs while products have considerably large margin differences. Academic/practical relevance: We address issue by introducing differentials into analysis process designs, and our results can provide useful guidelines for evaluation design configurations heterogeneous margins. Methodology: adopt robust optimization framework study from worst-case perspective dual group index (DMGI). Results managerial implications: show general class measures be expressed as functions design’s DMGIs given uncertainty set. Moreover, partial ordering enables us compare different designs. Applying these results, we prove under so-called partwise independently symmetric sets broad measures, alternate long-chain optimal among all with equal numbers high-profit low-profit products. Finally, develop heuristic generate effective exhibit differentials.